Enron Creditors Recovery Corporation

Enron Creditors Recovery Corporation (formerly Enron Corporation, former NYSE ticker symbol ENE) was an American energy company based in Houston, Texas. It was formed in 1985 when Houston Natural Gas merged with InterNorth. Before its bankruptcy in late 2001, Enron employed approximately 22,000 (McLean & Elkind, 2003) and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of nearly $101 billion in 2000. Fortune named Enron "America's Most Innovative Company" for six consecutive years.

This paper is based on the Enron Scandal from 2001. The Enron scandal was a financial scandal involving Enron Corporation and its accounting firm Arthur Andersen. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron was on the verge of bankruptcy by November of 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable and Enron completely disappeared from the market leaving its name associated with one of the biggest financial scandal in the U.S. and worldwide. Enron filed for bankruptcy on December 2, 2001.

At the end of 2001 it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, sometimes called the "Enron scandal". Enron has since become a popular symbol of willful corporate fraud and corruption. The Scandal was also considered a landmark case in the field of business fraud and brought into question the accounting practices of many corporations throughout the United States.

As the scandal was revealed, Enron shares dropped from over US$90.00 to less than 50¢. As Enron had been considered a blue chip stock, this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements.

In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the five largest accounting firms in the world.

After several